81 FR 86041 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending NYSE MKT Rule 901NY

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 229 (November 29, 2016)

[Federal Register Volume 81, Number 229 (Tuesday, November 29, 2016)]
[Notices]
[Pages 86041-86044]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-28633]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79374; File No. SR-NYSEMKT-2016-106]


Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change Amending NYSE MKT Rule 
901NY

November 22, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act''),\2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on November 10, 2016, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I and II 
below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend NYSE MKT Rule 901NY to permit the 
Chief Executive Officer of the Exchange or his or her designee to take 
certain actions in connection with the trading of securities on the 
NYSE Amex Options marketplace. The proposed rule change is available on 
the Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend NYSE Amex Options Rule 901NY 
(Trading Sessions) to permit the Chief Executive Officer (``CEO'') of 
the Exchange or his or her designee to take certain actions in 
connection with the trading of securities on the Exchange.
    The Exchange believes the proposed rule change would make Rule 
901NY more reflective of the organizational structure of the Exchange. 
At the same time, the proposed rule changes would ensure that the Board 
of Directors of the Exchange continues to have the authority to take 
action it deems necessary or appropriate in particular situations.
    The first paragraph of Rule 901NY provides that, unless otherwise 
ruled by the Board of the Exchange or its designee, the Exchange shall 
be open for the transaction of business daily except on Saturdays and 
Sundays, and that the hours at which trading sessions shall open and 
close shall be established by the Board or its designee. Commentary .01 
to Rule 901NY notes that, except under unusual conditions as may be 
determined by the Board or its designee, hours during which 
transactions in options on individual securities may be made on the 
Exchange shall correspond to the normal hours for business set forth in 
the rules of the primary exchange listing the securities underlying the 
options.
    The Exchange proposes to amend the first paragraph of Rule 901NY to 
provide that, except as may be otherwise determined by the Board as to 
particular days, the Exchange shall be open for the transaction of 
business on every business day. The Exchange proposes to remove the 
current exclusion of Saturdays and Sundays because Saturdays and 
Sundays are not business days and therefore no exclusion is needed. 
Finally, the amended paragraph would provide that the hours at which 
trading sessions shall open and close may be specified by Exchange 
rule, as well as by the Board. The two paragraphs of the present rule 
would become paragraphs (a) and (b). These proposed rule changes are 
based in part Exchange Rule 51(a)--Equities as well as on New York 
Stock Exchange LLC (``NYSE LLC'') Rule 51(a).\4\
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    \4\ See Securities Exchange Act Release No. 58705 (October 1, 
2008), 73 FR 58995 (October 8, 2008) (SR-Amex-2008-63). NYSE LLC is 
an affiliate of the Exchange. See Securities Exchange Act Release 
No. 45433 (February 12, 2002), 67 FR 7441 (February 19, 2002) (SR-
NYSE-2001-55). The Exchange notes that its affiliate NYSE Arca, Inc. 
is submitting substantially the same proposed rule change for NYSE 
Arca Rule 7.1 and NYSE Arca Equities Rule 7.1. See SR-NYSEArca-2016-
148.
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    The Exchange proposes to add new paragraphs (c), (d), and (e) to 
Rule 901NY. These proposed changes are based on Rule 51(b)-(d)--
Equities and NYSE Rule 51(b) and (c). New paragraph (c) would provide 
that, except as may be otherwise determined by the Board of Directors, 
the CEO of the Exchange or his or her designee may halt or suspend 
trading in some or all securities traded on the Exchange; extend the 
hours for the transaction of business on the Exchange; close some or 
all Exchange facilities; determine the duration of any such halt, 
suspension or closing undertaken; or determine to trade securities on 
the Exchange's disaster recovery facility.\5\
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    \5\ As part of its business continuity and disaster recovery 
plans, the Exchange maintains a disaster recovery facility, which is 
a secondary data center located in a geographically diverse 
location, as required by Regulation SCI. See 14 CFR 
242.1001(a)(2)(v) (requiring policies and procedures for business 
continutity [sic] and disaster recovery plans that include 
maintaining backup and recovery capabilities sufficiently resilient 
and geographically diverse and that are reasonably designed to 
achieve next business day resumption of trading and two-hour 
resumption of critical SCI systems following a wide-scale 
disruption).

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[[Page 86042]]

    New paragraph (d) would provide that the CEO or his or her designee 
shall take any of the actions described in new paragraph (c) only when 
he or she deems such action to be necessary or appropriate for the 
maintenance of a fair and orderly market, or the protection of 
investors or otherwise in the public interest, due to extraordinary 
circumstances such as:
     Actual or threatened physical danger, severe climatic 
conditions, civil unrest, terrorism, acts of war, or loss or 
interruption of facilities utilized by the Exchange,
     a request by a governmental agency or official, or
     a period of mourning or recognition for a person or event.
    New paragraph (e) would require that the CEO or his or her designee 
notify the Board of Directors of actions taken pursuant to the rule, 
except for a period of mourning or recognition for a person or event, 
as soon thereafter as is feasible.\6\
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    \6\ For example, the Exchange may close on a national day of 
mourning for a former president of the United States.
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    The Exchange proposes that commentary .01 to Rule 901NY be amended 
by deleting ``under unusual conditions'' and a reference to the Board's 
designee, and by adding a reference to the authority of the CEO or his 
or her designee under new subparagraph (c).
    Finally, the Exchange proposes to change the name of Rule 901NY 
from ``Trading Sessions'' to ``Hours of Business,'' which would make it 
consistent with Rule 51--Equities.
    Currently, Rule 901NY requires Board action if extraordinary 
circumstances arise. However, the Board of Directors may not be able to 
convene and act quickly, thereby delaying any potential response. 
Pursuant to the operating agreement of the Exchange, a majority of the 
members of the Board of Directors must be Independent Directors.\7\ 
Therefore, as a practical matter, they are unlikely to be at or near 
the Exchange if extraordinary circumstances arise, making it harder to 
convene quickly. Further, if communication systems are severely 
compromised in an emergency, the Board of Directors may not be able to 
convene at all.\8\
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    \7\ See Tenth Amended and Restated Operating Agreement of NYSE 
MKT LLC, Article II, Sec. 2.03(a)(i). ``Independent Directors'' are 
directors that are U.S. persons that satisfy the independence 
requirements of the Exchange. Id.
    \8\ The presence of a majority of directors then in office is 
necessary to constitute a quorum. See Tenth Amended and Restated 
Operating Agreement of NYSE MKT LLC, Article II, Sec. 2.03(d).
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    Current Rule 901NY partially addresses this concern by allowing the 
Board of Directors to name designees. However, use of a designee 
requires that the Board make the delegation before any unusual 
conditions arise. Further, Rule 901NY does not set any limits on when 
designees may act under the rule, unlike proposed paragraphs (c) and 
(d). Accordingly, the Exchange proposes to delete the references to a 
Board designee in the first paragraph of Rule 901NY and commentary .01. 
Such proposed deletions would make Rule 901NY consistent with Rule 
51(a)--Equities, NYSE Rule 51(a) and NYSE Arca Equities Rule 7.1, none 
of which contemplate the board of directors appointing a designee to 
set the hours for business.
    The Exchange believes designating by rule that the CEO of the 
Exchange or his or her designee may take certain actions in 
extraordinary circumstances would make Rule 901NY more reflective of 
the organizational structure of the Exchange. As described above, the 
CEO or his or her designees would be able to take such action only when 
they deem it to be necessary or appropriate for the maintenance of a 
fair and orderly market, or the protection of investors or otherwise in 
the public interest, due to extraordinary circumstances.
    The proposed amendments would ensure that the Board of Directors 
continues to have the authority to take action it deems necessary or 
appropriate in particular situations. In addition, as proposed, the 
amended rule would ensure that the Board of Directors would remain 
informed, by requiring the CEO to notify the relevant Board of actions 
taken pursuant to the authority granted under the rule, with the 
exception of a period of mourning or recognition for a person or event, 
as soon thereafter as is feasible.
    The proposed changes would have the additional benefit of bringing 
Rule 901NY into greater conformity with Rule 51--Equities, as well as 
NYSE Rule 51.\9\
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    \9\ Rule 51(a)--Equities and NYSE Rule 51(a) do not state that 
the CEO can name a designee. However, pursuant to Rule 1--Equities 
and NYSE Rule 1, the CEO of the relevant exchange may designate one 
or more qualified employees to act in his or her place in the event 
that the CEO is not available. See Rule 1--Equities and NYSE Rule 1. 
See also Securities Exchange Act Release No. 61810 (March 31, 2010), 
75 FR 17816 (April 7, 2010) (SR-NYSE-2010-26).
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    The Exchange notes that the trading rules of Bats BZX Exchange, 
Inc., Bats BYX Exchange, Inc., Bats EDGX Exchange, Inc., and Bats EDGA 
Exchange, Inc. also provide that the CEO of the relevant exchange may 
halt, suspend trading in any and all securities traded on the exchange, 
close some or all exchange facilities, and determine the duration of 
any such halt, suspension, or closing, when he deems such action 
necessary for the maintenance of fair and orderly markets, the 
protection of investors, or otherwise in the public interest. The lists 
of special circumstances set out in such trading rules are 
substantially similar to those in Rule 51--Equities and NYSE Rule 
51.\10\
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    \10\ See Bats BZX Exchange, Inc. Rule 11.1(c); Bats BYX 
Exchange, Inc. Rule 11.1(c); Bats EDGX Exchange, Inc. Rule 11.1(c); 
and Bats EDGA Exchange, Inc. Rule 11.1(c).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\11\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\12\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to, and 
perfect the mechanisms of, a free and open market and a national market 
system and, in general, to protect investors and the public interest 
and because it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers. The Exchange also believes 
that the proposed rule change is consistent with Section 6(b)(1) of the 
Act,\13\ in that it enables the Exchange to be so organized as to have 
the capacity to be able to carry out the purposes of the Act and to 
comply, and to enforce compliance by its exchange members and persons 
associated with its exchange members, with the provisions of the Act, 
the rules and regulations thereunder, and the rules of the Exchange.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78f(b)(1).
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    The Exchange believes that the proposed rule change would remove 
impediments to, and perfect the mechanisms of, a free and open market 
and a national market system and, in general, protect investors and the 
public interest, and enable the Exchange to be so organized as to have 
the capacity to be able to carry out the purposes of the Act, because 
it would make Rule 901NY more reflective of the organizational 
structure of the Exchange. In this manner, it would strengthen the 
ability of the Exchange to respond appropriately and in a timely 
fashion to

[[Page 86043]]

extraordinary circumstances, even if the Board of Directors is unable 
to convene. However, unlike present Rule 901NY, which puts no limits on 
when the Board's designees may act, the proposed amended Rule 901NY 
would ensure that the CEO or his or her designee would be able to take 
action only when he or she deems such action to be necessary or 
appropriate for the maintenance of a fair and orderly market, or the 
protection of investors or otherwise in the public interest, due to 
extraordinary circumstances.
    In addition, the Exchange believes that the proposed rule change 
would remove impediments to, and perfect the mechanisms of, a free and 
open market and a national market system and, in general, protect 
investors and the public interest, and enable the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Act, because they would ensure that the Board of Directors 
continues to have the authority to take action it deems necessary or 
appropriate in particular situations. In addition, as proposed, the 
amended rule would ensure that the Board of Directors would remain 
informed, by requiring the CEO to notify the relevant Board of actions 
taken pursuant to the authority granted under the rule, with the 
exception of a period of mourning or recognition for a person or event, 
as soon thereafter as is feasible.
    For these reasons, the Exchange believes that the proposal is 
consistent with the Act.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The proposed rule 
change is not intended to address competitive issues but rather is 
concerned solely with the administration and functioning of the 
Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \14\ and Rule 19b-4(f)(6) thereunder.\15\
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \16\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \17\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
states that waiver of the operative delay would immediately strengthen 
the ability of the Exchange to respond appropriately and in a timely 
fashion to extraordinary circumstances. The Exchange further states 
that waiving the 30-day operative delay would not affect the authority 
of the Board of Directors to take action it deems necessary or 
appropriate in particular situations. Moreover, the Exchange states 
that waiver of the 30-day operative delay would allow the Exchange to 
align its Rule 901NY and its Rule 51(a)--Equities without delay. The 
Commission believes that the waiver of the operative delay is 
consistent with the protection of investors and the public interest. 
Therefore, the Commission hereby waives the operative delay and 
designates the proposal operative upon filing.\18\
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    \16\ 17 CFR 240.19b-4(f)(6).
    \17\ 17 CFR 240.19b-4(f)(6)(iii).
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSEMKT-2016-106 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2016-106. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2016-106, and should 
be submitted on or before December 20, 2016.


[[Page 86044]]


    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28633 Filed 11-28-16; 8:45 am]
 BILLING CODE 8011-01-P